ZANNWELL INC.
CAPITAL STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made this ___ day of November, 2004, by and between
XXXXXX X. XXXXXXX (the "Seller") as a stockholder of ZANNWELL INC., a Nevada
corporation (the "Company"), and PALOMAR ENTERPRISES, INC., a Nevada corporation
(the "Purchaser").
WHEREAS, the Seller desires to sell to the Purchaser 19,000,000 shares of
the series A Preferred Stock of the Company, par value $0.001 per share (the
"Series A Preferred Stock"), 10,000,000 shares of the series B preferred stock
of the Company, par value $0.001 per share (the "Series B Preferred Stock"); and
10,000,000 shares of the series C preferred stock of the Company, par value
$0.001 per share (the "Series C Preferred Stock");
WHEREAS, the Purchaser desires to purchase the Series A Preferred Stock,
the Series B Preferred Stock and the Series C Preferred Stock as hereinafter
provided;
NOW, THEREFORE, in consideration of the foregoing and the following mutual
covenants and agreements, the parties hereto agree as follows:
1. Purchase of Stock. At the closing of this Agreement (the
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"Closing"), upon the basis of the covenants, warranties and representations of
the Purchaser set forth in this Agreement, the Seller will sell, transfer,
assign, and deliver to the Purchaser 19,000,000 shares of the Series A Preferred
Stock, 10,000,000 shares of the Series B Preferred Stock and 10,000,000 shares
of the Series C Preferred Stock, free and clear of all liens and encumbrances,
except as otherwise may be permitted hereunder.
2. Purchase Price. The purchase price of $380,000 to be paid at the
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Closing shall consist of the following:
(a) The sum of 205,000 in cash.
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(b) The payment of approximately $175,000 representing all sums
due by the Seller to the Purchaser in connection with monies advanced by the
Purchaser.
3. Restrictive Legend. All shares of the Series A Preferred Stock, the
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Series B Preferred Stock and the Series C Preferred Stock to be delivered
hereunder shall be issued pursuant to an exemption from registration under
Section 4(2) of the Securities Act of 1933, as amended, inasmuch as such shares
will be issued for investment purposes without a view to distribution. All
shares of the Series A Preferred Stock, the Series B Preferred Stock and the
Series C Preferred Stock to be delivered hereunder shall bear a restrictive
legend in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER SUCH SHARES NOR ANY INTEREST THEREIN MAY BE OFFERED,
SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS A REGISTRATION STATEMENT
WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT."
4. Representations and Warranties of the Seller. Where a
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representation contained in this Agreement is qualified by the phrase "to the
best of the Seller's knowledge" (or words of similar import), such expression
means that, after having conducted a due diligence review, the Seller believes
the statement to be true, accurate, and complete in all material respects.
Knowledge shall not be imputed nor shall it include any matters which such
person should have known or should have been reasonably expected to have known.
The Seller represents and warrants to the Purchaser as follows:
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(a) Power and Authority. The Seller has full power and authority
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to execute, deliver, and perform this Agreement and all other agreements,
certificates or documents to be delivered in connection herewith, including,
without limitation, the other agreements, certificates and documents
contemplated hereby (collectively the "Other Agreements").
(b) Binding Effect. Upon execution and delivery by the Seller,
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this Agreement and the Other Agreements shall be and constitute the valid,
binding and legal obligations of the Seller, enforceable against the Seller in
accordance with the terms hereof and thereof, except as the enforceability
hereof or thereof may be subject to the effect of (i) any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally, and (ii) general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).
(c) Effect. Neither the execution and delivery of this Agreement
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or the Other Agreements nor full performance by the Seller of his obligations
hereunder or thereunder will violate or breach, or otherwise constitute or give
rise to a default under, the terms or provisions of the Articles of
Incorporation or Bylaws of the Company or, subject to obtaining any and all
necessary consents, of any contract, commitment or other obligation of the
Company or necessary for the operation of the Company following the Closing or
any other material contract, commitment, or other obligation to which the
Company is a party, or create or result in the creation of any encumbrance on
any of the property of the Company. The Company is not in violation of its
Articles of Incorporation, as amended, its Bylaws, as amended, or of any
indebtedness, mortgage, contract, lease, or other agreement or commitment.
(d) No Consents. No consent, approval or authorization of, or
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registration, declaration or filing with any third party, including, but not
limited to, any governmental department, agency, commission or other
instrumentality, will, except such consents, if any, delivered or obtained on or
prior to the Closing, be obtained or made by the Seller prior to the Closing to
authorize the execution, delivery and performance by the Seller of this
Agreement or the Other Agreements.
(e) Stock Ownership of the Shares to be Sold by the Seller. The
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Seller has good, absolute, and marketable title to the 19,000,000 shares of the
Series A Preferred Stock which constitute 95 percent of the issued and
outstanding shares of the Series A Preferred Stock, 10,000,000 shares of the
Series B Preferred Stock, which constitute 100 percent of the issued and
outstanding shares of the Series B Preferred Stock, and the 10,000,000 shares of
the Series C Preferred Stock, which constitute 100 percent of the issued and
outstanding shares of the Series C Preferred Stock. The Seller has the complete
and unrestricted right, power and authority to cause the sale, transfer, and
assignment of the Series A Preferred Stock, the Series B Preferred Stock and the
Series C Preferred Stock pursuant to this Agreement. Each share of the Series A
Preferred Stock is convertible into ten shares of the Company's common stock,
par value $0.001 per share (the "Common Stock"). The shares of the Series A
Preferred Stock do not have voting rights. Each share of the Series B Preferred
Stock is convertible into two hundred shares of the Company's Common Stock. On
all matters submitted to a vote of the holders of the Common Stock, a holder of
the Series B Preferred Stock is entitled to one vote per share of the Series B
Preferred Stock held by such holder. The Series C Preferred Stock is
nonconvertible and entitles the holder to 100 votes of the Company's Common
Stock on all matters brought before the stockholders of the Company. The
delivery of the Series A Preferred Stock, the Series B Preferred Stock and the
Series C Preferred Stock to the Purchaser as herein contemplated will vest in
the Purchaser good, absolute and marketable title to the shares of the Series A
Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock
as described herein, free and clear of all liens, claims, encumbrances, and
restrictions of every kind, except those restrictions imposed by applicable
securities laws or this Agreement.
(f) Organization and Standing of the Company. The Company is a
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duly organized and validly existing Nevada corporation in good standing, with
all requisite corporate power and authority to carry on the Business as
presently conducted. The Company has not qualified to do business in any other
jurisdiction.
(g) No Subsidiaries. The Company has no subsidiaries.
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(h) Capitalization and Other Outstanding Shares. The Company is
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authorized by its Articles of Incorporation to issue 900,000,000 shares of the
Common Stock and 50,000,000 shares of preferred stock, par
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value $0.001 per share. There are three series of the Company's preferred stock,
Series A with 20,000,000 shares authorized (the "Series A Preferred Stock"),
Series B with 10,000,000 shares authorized (the "Series B Preferred Stock"), and
the Series C Preferred Stock with 20,000,000 shares authorized (the "Series C
Preferred Stock"). As of the date of this Agreement, the Company has duly and
validly issued and outstanding, fully paid, and non-assessable, 172,750,000
shares of the Common Stock, 20,000,000 shares of the Series A Preferred Stock,
10,000,000 of the Series B Preferred Stock and 10,000,000 of the Series C
Preferred Stock. In addition to the Series A, the Series B and the Series C
Preferred Stock, the Seller owns 13,000,000 shares of the Common Stock, which
are not being sold hereunder. There are no outstanding options, contracts,
commitments, warrants, preemptive rights, agreements or any rights of any
character affecting or relating in any manner to the issuance of the Common
Stock, the Series A Preferred Stock, the Series B Preferred Stock and the Series
C Preferred Stock or other securities or entitling anyone to acquire the Common
Stock, the Series A Preferred Stock, the Series B Preferred Stock and the Series
C Preferred Stock or other securities of the Company.
(i) Assets and Liabilities. The Company does not have any assets
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or liabilities.
(j) Litigation. There are no legal actions, suits, arbitrations,
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or other legal, administrative or other governmental proceedings pending or
threatened against the Company, and the Seller are not aware of any facts which
to his knowledge may result in any such action, suit, arbitration, or other
proceeding.
(k) No Employees. As of the date of this Agreement as well as at
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the Closing, the Company does not have and will not have any employees.
(l) Records. The books of account and minute books of the Company
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are complete and correct, and reflect all those transactions involving its
business which properly should have been set forth in such books.
(m) SEC Filings. The Company has currently filed with the
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Securities and Exchange Commission all reports required to have been filed by it
under the Securities Act and the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
(n) The Seller's Representations and Warranties True and Complete.
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All representations and warranties of the Seller in this Agreement and the Other
Agreements are true, accurate and complete in all material respects as of the
Closing.
(o) No Knowledge of the Purchaser' Default. The Seller has no
-----------------------------------------
knowledge that any of the Purchaser's representations and warranties contained
in this Agreement or the Other Agreements are untrue, inaccurate or incomplete
or that the Purchaser is in default under any term or provision of this
Agreement or the Other Agreements.
(p) No Untrue Statements. No representation or warranty by the
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Seller in this Agreement or in any writing furnished or to be furnished pursuant
hereto, contains or will contain any untrue statement of a material fact, or
omits, or will omit to state any material fact required to make the statements
herein or therein contained not misleading.
(q) Reliance. The foregoing representations and warranties are
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made by the Seller with the knowledge and expectation that the Purchaser is
placing complete reliance thereon.
5. Representations and Warranties of the Purchaser. Where a
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representation contained in this Agreement is qualified by the phrase "to the
best of the Purchaser's knowledge" (or words of similar import), such expression
means that, after having conducted a due diligence review, the Purchaser believe
the statement to be true, accurate, and complete in all material respects.
Knowledge shall not be imputed nor shall it include any matters which such
person should have known or should have been reasonably expected to have known.
The Purchaser hereby represents and warrants to the Seller as follows:
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(a) Power and Authority. The Purchaser has full power and
---------------------
authority to execute, deliver and perform this Agreement and the Other
Agreements.
(b) Binding Effect. Upon execution and delivery by the Purchaser,
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this Agreement and the Other Agreements shall be and constitute the valid,
binding and legal obligations of the Purchaser enforceable against the Purchaser
in accordance with the terms hereof or thereof, except as the enforceability
hereof and thereof may be subject to the effect of (i) any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or affecting creditors' rights generally, and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(c) No Consents. No consent, approval or authorization of, or
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registration, declaration or filing with any third party, including, but not
limited to, any governmental department, agency, commission or other
instrumentality, will, except such consents, if any, delivered or obtained on or
prior to the Closing, be obtained or made by the Purchaser prior to the Closing
to authorize the execution, delivery and performance by the Purchaser of this
Agreement or the Other Agreements.
(d) The Purchaser's Representations and Warranties True and
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Complete. All representations and warranties of the Purchaser in this Agreement
and the Other Agreements are true, accurate and complete in all material
respects as of the Closing.
(e) No Knowledge of the Seller's Default. The Purchaser has no
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knowledge that any of the Seller's representations and warranties contained in
this Agreement or the Other Agreements are untrue, inaccurate or incomplete in
any respect or that the Seller is in default under any term or provision of this
Agreement or the Other Agreements.
(f) No Untrue Statements. No representation or warranty by the
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Purchaser in this Agreement or in any writing furnished or to be furnished
pursuant hereto, contains or will contain any untrue statement of a material
fact, or omits, or will omit to state any material fact required to make the
statements herein or therein contained not misleading.
(g) Reliance. The foregoing representations and warranties are
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made by the Purchaser with the knowledge and expectation that the Seller is
placing complete reliance thereon.
6. Conditions Precedent to Obligations of the Purchaser. All
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obligations of the Purchaser under this Agreement are subject to the
fulfillment, prior to or at the Closing, of the following conditions:
(a) Representations and Warranties True at the Closing. The
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representations and warranties of the Seller herein shall be deemed to have been
made again as of the Closing, and then be true and correct, subject to any
changes contemplated by this Agreement. The Seller shall have performed all of
the obligations to be performed by them hereunder on or prior to the Closing.
(b) Deliveries at the Closing. The Seller shall have delivered to
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the Purchaser at the Closing all of the documents required to be delivered
hereunder.
(c) Resolution Electing Xxxxxx Xxxxxxxxxxx and Xxxxx Xxxxx
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Director sand Officers. The Seller shall have delivered to the Purchaser at the
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Closing a resolution of the Board of Directors of the Company electing Xxxxxx
Xxxxxxxxxxx a director, President and Chief Executive Officer of the Company,
and electing Xxxxx Xxxxx a director, Secretary and Chief Financial Officer of
the Company.
(d) Resignations of Directors and Officers. The Seller shall have
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delivered to the Purchaser at the Closing, following the election of Xxxxxx
Xxxxxxxxxxx and Xxxxx Xxxxx as directors and officers of the Company, the
written resignations of all of the directors and officers of the Company other
than Xxxxxx Xxxxxxxxxxx and Xxxxx Xxxxx.
4
(e) Corporate Records, etc. The Seller shall have delivered to
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the Purchaser the originals of the Articles of Incorporation, Bylaws, minute
books, and other corporate governance materials used since the inception of the
Company.
(f) The Seller shall have agreed to assume obligation for the
expenses incurred by the Company which are set forth on Exhibit A to this
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Agreement.
7. Conditions Precedent to Obligations of the Seller. All obligations
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of the Seller under this Agreement are subject to the fulfillment, prior to or
at the Closing, of the following conditions:
(a) Representations and Warranties True at Closing. The
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representations and warranties of the Purchaser herein shall be deemed to have
been made again at the Closing, and then be true and correct, subject to any
changes contemplated by this Agreement. The Purchaser shall have performed all
of the obligations to be performed by the Purchaser hereunder on or prior to the
Closing.
(b) Payments. The Purchaser shall have delivered the payments for
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the Series A, the Series B and the Series C Preferred Stock as provided herein.
8. The Nature and Survival of Representations, Covenants and
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Warranties. All statements and facts contained in any memorandum, certificate,
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instrument, or other document delivered by or on behalf of the parties hereto
for information or reliance pursuant to this Agreement, shall be deemed
representations, covenants and warranties by the parties hereto under this
Agreement. All representations, covenants and warranties of the parties shall
survive the Closing and all inspections, examinations, or audits on behalf of
the parties, shall expire one year following the Closing.
9. Records of the Company. For a period of five years following the
-------------------------
Closing, the books of account and records of the Company pertaining to all
periods prior to the Closing shall be available for inspection by the Seller for
use in connection with tax audits.
10. Further Conveyances and Assurances. After the Closing, the Seller
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and the Purchaser, each, will, without further cost or expense to, or
consideration of any nature from the other, execute and deliver, or cause to be
executed and delivered, to the other, such additional documentation and
instruments of transfer and conveyance, and will take such other and further
actions, as the other may reasonably request as more completely to sell,
transfer and assign to and fully vest in the Purchaser ownership of the Series A
Preferred Stock and the Series C Preferred Stock and to consummate the
transactions contemplated hereby.
11. Closing. The Closing of the sale and purchase contemplated
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hereunder shall be on or before November 30, 2004, subject to acceleration or
postponement from time to time as the Seller and the Purchaser may mutually
agree.
12. Deliveries at the Closing by the Seller. At the Closing the Seller:
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(a) Shall deliver to the Purchaser certificates representing
19,000,000 shares of the Series A Preferred Stock, 10,000,000 shares of the
Series B Preferred Stock, and 10,000,000 shares of the Series C Preferred Stock,
duly endorsed by the Seller, free and clear of all liens, claims, encumbrances,
and restrictions of every kind except for the restrictive legend required by
Paragraph 3 hereof.
(b) The Seller shall deliver the resolution of the Board of
Directors of the Company electing Xxxxxx Xxxxxxxxxxx and Xxxxx Xxxxx directors
and officers of the Company described in Paragraph 6(c) hereof.
(c) The Seller shall deliver the resignations of all of the
directors and officers of the Company, other than Xxxxxx Xxxxxxxxxxx and Xxxxx
Xxxxx, as described in Paragraph 6(d) hereof.
(d) The Seller shall deliver any other document which may be
necessary to carry out the intent of this Agreement.
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13. Deliveries at the Closing by the Purchaser. At the Closing, the
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Purchaser shall deliver to the Seller the following:
(a) The sum of $205,000 to be paid by wire transfer in immediately
available funds. The funds shall be wired to the Glast, Xxxxxxxx & Xxxxxx Trust
Account, Xxxxxx X. Xxxxxxxx, Esq., at Gateway National Bank, 00000 X. Xxxxxxx
Xxxxxxxxxx Xxxxx 000 Xxxxxx, Xxxxx 00000, Routing Number 000000000, Account
Number 0000000.
(b) The Purchaser shall deliver any other document which may be
necessary to carry out the intent of this Agreement.
14. No Assignment. This Agreement shall not be assignable by any party
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without the prior written consent of the other parties, which consent shall be
subject to such parties' sole, absolute and unfettered discretion.
15. Brokerage. The Seller and the Purchaser agree to indemnify and
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hold harmless each other against, and in respect of, any claim for brokerage or
other commissions relative to this Agreement, or the transactions contemplated
hereby, based in any way on agreements, arrangements, understandings or
contracts made by either party with a third party or parties whatsoever.
16. Attorney's Fees. In the event that it should become necessary for
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any party entitled hereunder to bring suit against any other party to this
Agreement for enforcement of the covenants contained in this Agreement, the
parties hereby covenant and agree that the party or parties who are found to be
in violation of said covenants shall also be liable for all reasonable
attorney's fees and costs of court incurred by the other party or parties that
bring suit.
17. Benefit. All the terms and provisions of this Agreement shall be
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binding upon and inure to the benefit of and be enforceable by each of the
parties hereto, and his respective heirs, executors, administrators, personal
representatives, successors and permitted assigns.
18. Construction. Words of any gender used in this Agreement shall be
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held and construed to include any other gender, and words in the singular number
shall be held to include the plural, and vice versa, unless the context requires
otherwise.
19. Waiver. No course of dealing on the part of any party hereto or
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its agents, or any failure or delay by any such party with respect to exercising
any right, power or privilege of such party under this Agreement or any
instrument referred to herein shall operate as a waiver thereof, and any single
or partial exercise of any such right, power or privilege shall not preclude any
later exercise thereof or any exercise of any other right, power or privilege
hereunder or thereunder.
20. Cumulative Rights. The rights and remedies of any party under this
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Agreement and the instruments executed or to be executed in connection herewith,
or any of them, shall be cumulative and the exercise or partial exercise of any
such right or remedy shall not preclude the exercise of any other right or
remedy.
21. Invalidity. In the event any one or more of the provisions
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contained in this Agreement or in any instrument referred to herein or executed
in connection herewith shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect the other provisions of this Agreement or any such other
instrument.
22. Time of the Essence. Time is of the essence of this Agreement.
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23. Multiple Counterparts. This Agreement may be executed in one or
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more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. A facsimile transmission
of this signed Agreement shall be legal and binding on all parties hereto.
6
24. Law Governing. This Agreement shall be construed and governed by
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the laws of the State of Nevada.
25. Entire Agreement. This instrument and the attachments hereto
-----------------
contain the entire understanding of the parties and may not be changed orally,
but only by an instrument in writing signed by the party against whom
enforcement of any waiver, change, modification, extension, or discharge is
sought.
IN WITNESS WHEREOF, this Agreement has been executed in multiple
counterparts on the date first written above.
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XXXXXX X. XXXXXXX
PALOMAR ENTERPRISES, INC.
By
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Xxxxxx Xxxxxxxxxxx, President
Attachment:
Exhibit A - Obligations of the Company
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EXHIBIT A
OBLIGATIONS OF THE COMPANY
ZANNWELL INC.
A/P AGING SUMMARY
AS OF NOVEMBER 27, 2004
CURRENT 1 - 30 31 - 60 61 - 90 > 90 TOTAL
-------- -------- ----------- ------- ---------- --------
1 ADP Investor Communication Services 161.32 158.65 0.00 0.00 0.00 319.97
2 ATNG, Inc. 0.00 0.00 -150,000.00 0.00 150,000.00 0.00
3 Xxxxxx Xxxxx 0.00 1,050.00 0.00 0.00 0.00 1,050.00
4 Xxxxxx & Xxxxxx, PLLC ** 5,000.00 0.00 0.00 0.00 5,000.00
5 Xxxxxx Capital Corporation 0.00 0.00 2,000.00 0.00 0.00 2,000.00
6 Pacific Stock Transfer Company 0.00 0.00 0.00 80.00 0.00 80.00
7 Spectrum Law Group, LLP 0.00 519.00 0.00 0.00 0.00 519.00
-------- -------- ----------- ------- ---------- --------
TOTAL 5,161.32 1,727.65 -148,000.00 80.00 150,000.00 8,968.97
======== ======== =========== ======= ========== ========
**Estimate for third quarter 10Q xxxx.
#1, #3, & #5 have been assigned to Zann Corp. (old ATNG).
#2 has been written off by ATNG (new Zann Corp.)
#6 & #7 have already been paid
#4 is an estimate, as we have not received a xxxx yet.
